Microsoft profits up, though now lower than Apple’s

microsoft sues over malware bearing ads logoDespite a fall in the sales of its Windows operating system and losses in its online service division (which Bing is a part of), Microsoft, who today issued its report for the third fiscal quarter ending March 31, still reported a jump in profits of 31% (at $5.23 billion) on a year earlier. Revenues were up 13 percent at $16.43 billion.

This can be attributed to healthy sales of its Office software, along with Xbox consoles and Kinect controllers. Its Windows 7 OS may be the fastest selling operating system in history, but revenue for the segment dropped 4 percent in the quarter to $4.4 billion.

In a press release issued by the Redmond-based company on Thursday, chief financial officer Peter Klein said: “We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses.” He continued: “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”

The statement highlighted the fact that since its release last spring, Office 2010 has become the fastest selling version of Office. It also mentions that the entertainment and devices division grew by an impressive 60% – yes, that’s down to Xbox and Kinect.

Despite Microsoft’s online service division reporting an increase in revenue (up 14.5 percent to $648 million), and Bing increasing its share of the search market, high spending on promotion saw operating losses of more than $700 million.

The quarterly report is something of a mixed bag for Microsoft. While the company will be pleased with sales of Office and its games console, the losses incurred by its online service division will be something of a concern.

And here’s something to note: for the first time since 1991, Apple is once again more profitable than Microsoft. Apple’s figures, released last week, showed profits of $5.99 billion on revenues of $24.67 billion (compared to Microsoft’s $5.23 billion on $16.43 billion). You won’t be surprised to learn that it’s the iPhone and iPad which are largely responsible.